Building firms are beginning to feel the pressure of homeowners making claims against them for the toxic Chinese drywall situation.  As is perfectly right, the first organization a homeowner turns to when they discover they have Chinese drywall is the builder who either built the house or did the renovation.

Homeowner insurance offers no protection in this instance because of the now infamous “pollution exclusion”  which allows insurers to shirk all responsibility for the claim.  Homeowners have no choice but to refer to the construction company to make good.  The exclusion is a pretty innocuous paragraph that in any other situation wouldn’t make the slightest difference to a homeowner.  It states “Pollutants are defined as any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

In the case of this toxic drywall the words acid and fumes are the important ones here as they are right in the middle of the exclusion.  But, for most homeowner insurance there is an exception to this exclusion which relates to products or completed work of an insured.  So this means if a homeowner had bought the house after the work had been done to it, or is the second owner from new they may still have a claim.

This may be a consolation for a few homeowners, but it still leaves the majority out in the cold.

Many builders are also finding their own insurers are also denying any claims on the same exclusion or a Total Pollution Exclusion included in their general liability insurance.  This clause allows the insurer to deny any claims that relate to Chinese drywall.  There are several suits filed with insurers who have denied claims due to this exclusion, so case law may have something to say about it.  With the first cases being heard in early 2010, there will be no quick answers here.

These builders are going to have to fund the repairs to homes out of their own profits or pockets which is going to ruin many of them.  Not all construction companies are of the size or scope to be able to handle multiple claims for remediation, and even some of the larger ones are going to struggle.  Some Florida construction firms have said they believe they have up to four hundred homes to remedy.  This kind of cost is going to run into the millions.

While individual suits will be heard in local courts, anyone that joined the various class-actions, builders or homeowners will now have their case heard under a Federal class action being heard in New Orleans.  The various suits were consolidated into one Federal case in order to efficiently try them in the most cost effective madder possible.  The hearing date has yet to be announced but is believed to be sometime next year.

The legal battles will be ongoing long after most of the homes have been remedied.  There will inevitably be those that depend on the suit in order to be able to afford to have their home repaired, of to afford to be able to repair them.

IN RESPONSE TO ANOTHER'S WRITER'S CONCERNED WORDS

While I think AC Content Producer Brenda Seigler's article entitled “Exports from China - Are They Trying to Kill Us?” is certainly eye-catching, I think the title and the article itself does little to foster an accurate - or at least fair - perspective on the very China that lies overseas - versus the land portrayed by a media driven by interested parties wishing to garner viewership at the possible cost of a partial skewing (skewering?) of the truth.

Discourse of exactly what the “real China” is, what the “real truth” is - as well as any mention of how said skewing of said truth takes place - may all be fodder for discussion as separate issues. Indeed these topics have filled volumes written over the centuries. I will not go there.

I wish to address some of Seigler's comments on a point-by point basis and venture some further comments in the hopes one can walk away with the benefit of a singular perspective as a former expatriate resident.

SEVERAL POINTS ADDRESSED

Point-by-point comments worthy of mention:

* “…Are They Trying to Kill Us?” - Again, an eye-catching title, I believe more for rhetorical effect than actual statement. My concern on this selection of words is what may be an already exacerbated skew which mainstream media moguls have spun before the eyes of many. To ask the question whether China is actually trying to kill us is a bit naïve, and insensitive to a majority audience that has little to no venue to defend itself. See my comment on China's mostly-poor constituency later in this article.

* “…art beads contained a date rape drug” - That a heated topic would be associated with yet another - is this just throwing one fire into another?

* “…then came the lead paint on our children's toys…” - No mention here of American toy giant Mattel's brave apology, which would hopefully bring this into better perspective.

* “…blowfish venom that was labeled as an edible fish…” - Leave it to Chinese folks to try almost anything out there as a dish. But blowfish hunting and the eating of blowfish is more closely associated with Japanese culture, not Chinese culture. To so ignorantly (innocently?) classify the one culture and people as the same as the other seems to point to a kind of stereotyping penultimate to the statement “Native Americans and the American populace in general are all the same”. Despite recent trends in “tolerance” and politically corrected-ness, I see this all too often when speaking with folks.

* “Without us they would not take home the handsome salaries that they do nor would they have the luxury of limo service and fine dining all at the taxpayers expense.” - While I do not contest this statement on the whole, let's be sure to keep in mind China's many poor versus China's few rich. In a survey conducted in 2004, disposable income per capita was 13,332 Chinese yuan (roughly US $1709.00) for the highest 10% income group, which is 2.8 times higher than the national average. The lowest 10% income group made only 1,397 yuan (US $179.00). This disparity in income means less and less people are able to afford what only a very few can buy - much less limousines. While new products and technology (including much-needed medical technology for China's poor) are available to China's rich, few to none of these things are readily available to the poor. Read more about China's problems on a broader perspective here.

* Yes,China is acting in such a sinister manner where we are concerned . (sic) - With a past history labeled by some as “Western exploitation” stemming back to the opium trade, to this I say some folks in China could easily feel the same way, Brenda. Answers.com states: “Anglo-Chinese conflict which ushered in a century of enforced exploitation of China, and a still-emotive symbol for Chinese resentment of the West.”

Indeed, cultural factors come into play, some of which apply to almost all overseas vendors in general.

CHINA HAS ITS PROBLEMS TOO

In a time when others may poke fun of a distant land or people they know little of, perhaps it would be helpful to develop an appreciation of the very real everyday problems these people and their land share with us together in a world growing ever smaller with each passing day.

WANT THE VERY BEST PERSPECTIVE?

Simple answer to this question: form your own honest opinion by doing some honest investigation. Go to China. See the folks there. See how they live. Most importantly, talk with them.

CAN'T GO?

On the chance you cannot go to China to have your own look, then the next best venue would be to turn to respected reporting resources. I suggest reading the following wonderful books: click here.

GOOD QUESTIONS ALL

A former boss of mine, Lars Amstrup (mentioned here), was fond of often saying “China is a vast and mysterious land”.

Indeed his words ring true, more so now than ever.

In this context, I believe Seigler's article and the many comments and questions she poses are a mirror to my former boss's adage. No doubt they reflect the genuine (and legitimate) concerns many Americans have about our still-much-unknown and distant neighbor across the seas: the People's Republic of China.

Thanks, Brenda!

Have fun!

- John

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